Do I Need a Local Entity to Hire in Austria?

In Austria, a "local entity" refers to a recognized employing presence, typically a subsidiary or branch office, that allows you to act as an employer. This setup enables you to fulfill local payroll and employment obligations, ensuring compliance with Austrian labor laws.

Without establishing a local entity, you cannot effectively manage employer responsibilities such as payroll registration, tax remittance, or issuing compliant employment contracts. An alternative is to use an Employer of Record (EOR), which can take on these responsibilities on your behalf.

What is Required to Employ Someone in Austria?

• Local employing entity required to directly employ? Yes (you need a local entity to manage payroll and compliance)
• Payroll registration required? Yes (mandatory for employer obligations with the Austrian tax office)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (mandatory contributions to social security funds)
• Local employment agreement required? Yes (written contracts are required under Austrian law)
• Mandatory benefits to budget? Yes (includes vacation, sick leave, and other statutory benefits)
• Works council/collective agreements considerations? Often (many sectors are influenced by collective agreements)

Best Options If You're Hiring in Austria

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks.

While hiring contractors in Austria doesn't require a local entity, you must ensure that the contractor relationship is genuinely independent. Austrian labor laws are protective of workers, and misclassifying a contractor as an independent worker can lead to significant liabilities.

Consider these points:

• Ensure the contractor has multiple clients and isn't exclusively working for you.
• Maintain minimal control over how the work is performed to avoid misclassification.
• Be aware that if the contractor's role is integral to your business, it may be scrutinized as employment.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Austria, depending on the registrations required.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €300–€600 per month ($320–$640)
• Payroll provider: Estimated €20–€50 per employee per month ($21–$53)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated €1,500–€3,500 per year ($1,600–$3,700)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, typically around 21% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Austria

Hiring in Austria can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Austria quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.